Power & Pipes

FERC, CFTC, and State Energy Law Developments

Earlier today, in Order No. 750, FERC approved an interpretation of IRO-005-1 and TOP-005-1, but decided not to adopt the NOPR proposal to direct NERC to modify the Reliability Standards to mandate reporting whenever a Special Protection System (SPS) loses a redundant communication channel. In deciding against its NOPR proposal, FERC relied on the “expert opinion” of NERC and the industry that no reliability gap exists under the proposed interpretation. As a result, the interpretations will take effect as proposed By NERC.

The interpretation proposed By NERC had concluded that there was no reporting obligation under IRO-005-1 or TOP-005-1 when an SPS loses one communication channel but has a redundant communication channel that will allow the SPS to operate as designed. In the resulting NOPR, however, FERC had expressed concern that even with a fully functioning redundant communication channel, the SPS would not be able to withstand a second communication component failure and therefore the SPS would be “operating at some state less than the normal secure state.” Because of this concern, the NOPR had proposed to direct NERC to modify the relevant Reliability Standards to require reporting to the appropriate entities under these circumstances.

In response to significant criticisms of this proposal By NERC and the industry, in today’s order FERC decided against implementing its NOPR proposal, and instead approved the interpretations as NERC proposed them. FERC explained that an SPS with a redundant communication channel would continue to operate as designed following the loss of one channel, and to the extent Reliability Coordinators want information regarding the status of each channel, the existing Reliability Standards allow them to obtain that data. FERC concluded: “Ultimately, the decision whether the redundancy of a particular system is needed to perform as designed is a judgment call that must be made By the appropriate reliability entities (i.e., the transmission operator and the reliability coordinator).”